EU grouping set for financial transaction tax

BRUSSELS (AP) -- A group of 11 European Union countries are set to get the green light to push ahead with the introduction of a financial transaction tax, Irish Finance Minister Michael Noonan said Tuesday.

The European Commission, the EU's executive branch, has suggested that trades in bonds and shares be taxed at 0.1 percent and trades in derivatives at 0.01 percent. The money raised could run into billions of euros and help shore up the finances of cash-strapped countries in Europe.

It's still unclear exactly how the funds raised would be used. Some supporters of the tax have suggested they could help fund the EU's budget and create a security net for banks to ensure that taxpayers won't have to pay for bailing out banks anymore.

Germany, France and nine other nations initially hoped the tax would be adopted by the whole EU. However, several countries, including Britain, which is home to the EU's biggest financial hub, refused to endorse the measure amid concerns over the measure's economic impact.

Last year's deadlock over the tax opened the possibility under EU law — using a so-called enhanced cooperation mechanism — for a group of more than nine nations to go ahead separately. The countries are expected to start working out detailed proposals following Tuesday's meeting of the EU's 27 finance ministers in Brussels.

Ireland's Noonan said Tuesday's decision "is more about process than about the make up or the actual relevance of the financial transaction tax." Ireland currently holds the rotating presidency of the EU, so Noonan was chairing the meeting.

The 11 countries backing the financial transaction tax are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. The Netherlands, where a new government came to power last fall, might also join the bid.

The meeting of the 27 EU finance ministers comes a day after the Eurogroup, which is composed of the finance ministers of the 17 EU nations that use the euro currency.

The Eurogroup elected Dutch Finance Minister Jeroen Dijsselbloem (DIE-sell-bloom) as the group's new president, replacing Jean-Claude Juncker, the Prime Minister of Luxembourg, who held the job for eight years. The Dutchman, who is 46, has been finance minister only since November.

Despite his inexperience, he will face immediate challenges, including the need to negotiate a bailout for Cyprus, pushing forward the introduction of a European banking union and reconciling deficit reduction in many countries with the need for growth-promoting policies.

At their meeting late Monday, the eurozone's finance ministers also agreed in principle to extend maturities on some of the debt of Ireland and Portugal, both of whom have received EU bailouts.

That move, echoing a similar concession made to Greece in December, will allow Ireland "to enhance the sustainability of Irish debt and over time will cost us less," Noonan said.